Terms of Trade Shocks and the Current Account in Small Island States
AbstractThis paper investigates the dynamic relationship between terms of trade shocks and the current account in selected small islands developing states. The findings show that the terms of trade explain a significant proportion of the variation in the current account balances. Also, the current account balances reflect a J-curve type reaction to terms of trade innovations. Real output also reacts negatively to changes in the terms of trade.
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Bibliographic InfoPaper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper RP2007/20.
Length: 26 pages
Date of creation: 2007
Date of revision:
terms of trade shocks; current account balance; panel data; vector autoregression; VAR;
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- Uz, Idil & Ketenci, Natalya, 2010. "Current account and relative prices: cointegration in the presence of structural breaks in emerging economies," MPRA Paper 27467, University Library of Munich, Germany.
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